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Cablegate: Vast Oil and Gas Potential in the Black Sea Asserted By

Published: Thu 14 Feb 2008 08:19 AM
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DE RUEHIT #0083/01 0450819
ZNR UUUUU ZZH
R 140819Z FEB 08
FM AMCONSUL ISTANBUL
TO RUEHAK/AMEMBASSY ANKARA 7456
RUEHC/SECSTATE WASHDC 7874
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNRAQ/IRAQ COLLECTIVE
RUEHDA/AMCONSUL ADANA 2337
RUETITH/ODC ANKARA TU
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
UNCLAS SECTION 01 OF 02 ISTANBUL 000083
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EEB FOR A/S SULLIVAN
EUR FOR DAS BRYZA
EEB FOR MANN
DOE FOR HEGBURG
E.O. 12958: N/A
TAGS: ENRG EPET TU
SUBJECT: Vast Oil and Gas Potential in the Black Sea Asserted by
Turkey's State Oil President
ISTANBUL 00000083 001.2 OF 002
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Summary
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1. (SBU) The Black Sea holds sizable oil and natural gas resources
according to the Turkish Petroleum Corporation (TPAO) President and
Chairman Mehmet Uysal. In a meeting on the margins of the Clean
Energy Conference on January 29 with U.S. Department of Energy
Deputy Assistant Secretary Alan Hegburg, Uysal stated that Turkey
will start early production of Black Sea energy within seven years.
Hegburg welcomed this development and cautioned Uysal that Russia
and Iran will not be able to meet future natural gas demands.
Developing alternative sources of natural gas sources from Egypt,
the Persian Gulf, or Iraqi would help meet future demand, according
to Hegburg.
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Bright Prospects for Black Sea Energy
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2. (SBU) Uysal stated TPAO expects high interest in a bidding round
that will close February 15 on five prospective areas in the Black
Sea. Uysal told Hegburg that recent seismic surveys of the Black
Sea showed potential for 10 billion barrels of oil equivalent (boe);
with oil expected in the eastern region and natural gas in the
western region. Moreover, the Black Sea is a technically easier
place to drill than the Caspian Sea since it lacks a hard layer of
salt, according to Uysal.
3. (SBU) TPAO intends to aggressively exploit the Black Sea,
according to Uysal. Early production should begin in 2015 and full
production would start in 2023. This date is particularly
significant since it coincides with the 100 year anniversary of the
founding of Turkey, and the ceremony for the start of full
production would be added to the Turkish centennial celebrations.
Hegburg welcomed this news and confirmed that potential contacts for
Black Sea resources would be developed with production sharing
agreements (PSA), a commercial arrangement favored by foreign
investors.
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More Gas Needed for Nabucco
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4. (SBU) Hegburg cautioned that there may not be enough gas to meet
Europe's growing demand. Hegburg stated that Iran is an unreliable
supplier, and Russia fails to make necessary investments into its
gas sector. Furthermore, gas from the promising fields in eastern
Russia could be piped eastward towards the growing Chinese and
Indian markets. Uysal responded that TPAO strongly supports the
Nabucco gas pipeline. He also added that LNG from the Turkish port
Ceyhan could supply gas to Europe. Note: GOT is encouraging the
development of an LNG terminal in Ceyhan. Presently, there is not
one. End note.) Uysal also insisted that Gazprom's 900 km pipeline
under the Black Sea--South Stream--was not a threat to Nabucco since
the project is not technically feasible.
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Prospects for Iraqi Energy Development
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5. (SBU) Uysal noted Turkey's interest and natural advantage in
developing Iraq's energy resources due to its historical ties and
existing oil operations. Uysal opined that Iraqi gas from Anbar
Province could be piped out to the Turkish port of Ceyhan via a gas
pipeline to be built paralleling existing oil lines or could be used
to feed Nabucco. However, the lack of a hydrocarbon law, an unclear
security situation, and business contracts that are unfavorable to
investors-(i.e. modified buyback contacts)-are current barriers for
developing Iraq's energy resources. (Note: TPAO and BOTAS are part
of a consortium led by Shell which has proposed a comprehensive gas
development plan for Iraq including eventual pipeline exports to
Europe. End note.) Hegburg stated that small steps could be taken in
Iraq, particularly capturing the gas that is currently being flared.
He also noted that Iraq must see value in the Turkish market before
committing to it, and said that currently, Turkey's gas pricing
strategy is not market competitive.
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6. DOE DAS Alan Hegburg has cleared this cable.
OUDKIRK
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